Two Trump Administration Proposed Rules Promise Less Government Waste and More Transpareny in Healthcare

The WasteWatcher

November 22, 2019 — Elizabeth Wright

The Trump administration recently released two proposed rules. One is designed to bring more fiscal integrity to Medicaid, a federal and state program with shared dollars that are used to provide healthcare for low-income people. The other rule is designed to provide more accessible information for patients about medical costs.

The Centers for Medicare and Medicaid Services (CMS) announced on November 12, 2019, that it was issuing the “Medicaid Fiscal Accountability Rule” (MFAR). This proposed rule would create “transparency in Medicaid payments and clamp down on impermissible financing arrangements to ensure that federal Medicaid dollars are spent in ways that support the direct needs of Medicaid beneficiaries.” At the time of the release, CMS Administrator Seema Verma said, “We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system. Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”

An example of such a scheme was provided in a November 12 Inside Health Policy article by James Romoser. He wrote, "a state uses a tax on hospitals to generate revenue that is then spent on Medicaid supplemental payments, triggering federal matching funds. The supplemental payments - including the federal funds - are paid out to hospitals, and the hospitals then pool the money behind the scenes and redistribute it among themselves, ensuring that each hospital receives at least as much money as it paid in the tax."

According to CMS, there has been a large increase in Medicaid spending, from $456 billion in 2013 to an estimated $576 billion in 2016, a 26 percent increase. Most of the increase in spending came from the federal share for Medicaid, which grew from $263 billion in 2013 to an estimated $363 billion in 2016, a 38 percent increase. CMS also reports that supplemental payments or added outlays for providers beyond the base Medicaid rate, has gone from 9.4 percent of all other payments in FY 2010 to 17.5 percent in FY 2017.

It is hoped the proposed rule will provide clearer Medicaid financing mechanisms and give CMS better tools to monitor and enforce statutory requirements. You can read more about it here.

With the increasing use of Health Savings Accounts, Flexible Spending Accournts, Health Reimbursement Accounts, co-pays and co-insurance, Citizens Against Government Waste (CAGW) has urged for more information on medical costs so people can be informed consumers, shop around for the best deal and know their out-of-pocket costs before they get the bill.

The Trump administration proposed a transparency rule on November 15, 2019 as an effort to make prices available for patients when they are considering a medical procedure or need to purchase a medical product. The proposal would require most group plans, such as a health plan provided by an employer or organization, including self-insured plans, to disclose prices and cost sharing information such as co-pays.

The administration stated the rule it is proposing is “to give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered health care items and services through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members, and in paper form, at the consumer’s request. This would empower consumers to shop and enable them to compare costs between specific providers before receiving care.”

CAGW is concerned, however, that some information may not be necessary and is carefully reviewing the proposed regulation to make sure it provides the information patients need but not interfere in a deleterious way with negotiations between providers and insurers.

For example, when someone goes shopping for a new television, that person wants to know what they will pay for the television and if they have a coupon, perhaps for a supplementary discount or free installation, what the final out-of-pocket costs will be. Those prices are readily available to anyone and encourage competition. The buyer is not likely interested in what the store paid the manufacturer, or wholesaler, for the television, or what the manufacturer paid for the materials needed to make the television. Furthermore, if those prices were revealed, it may be more information than the consumer needs and making it public could interfere with negotiations among the parties in manufacturing and selling of the television. That would likely drive up costs, not lower them. This phenomenon was explained in a 2015 Federal Trade Commission report, “Price Transparency or TMI?”